BMI-T report to focus on deregulation

Johannesburg, 17 Jan 2005

ICT analyst firm BMI-TechKnowledge is to release a report focusing on the opportunities that exist for value-added network service (VANS) providers and Internet service providers (ISPs) in the soon-to-be deregulated local telecoms industry.

According to Brian Neilson, BMI-T`s director of research, most analysts had assumed the emerging regulatory changes, including the forthcoming convergence legislation, would take place relatively slowly, without any sudden revolutionary changes.

"The latest round of announcements by the minister of communications promises to introduce a fresh wave of competition into the market and, like any change, bring opportunities for those who can successfully identify and exploit them," he says.

He believes VANS and ISPs are poised to benefit significantly, as they will be at the cutting-edge of no fewer than three of the new competition enablers, although new opportunities also attract more competitors, so the larger and more established players among them may also find themselves with more competition than before.

"A major impact of the new regulations will be enhanced services-based competition, and we expect to see new partnerships emerging between service providers in different sectors of the market, such as between VANS, cellular service providers and call back operators.

"All of these players will also increasingly partner with a wide range of infrastructure players at both the access and backbone network levels."

Neilson believes VANS and ISPs will benefit from cost savings that will develop from competition emerging in the backbone provisioning layer of the market, but the majority of these savings will have to be passed on to customers, in the form of price reductions or price/performance enhancements.

"This, in turn, will stimulate consumer demand, particularly residential uptake of broadband Internet access services. Residential broadband is currently running on fresh air, and needs a major boost of cheaper and faster supplier offerings to lift adoption rates."

He says the finer details of the minister`s announcements have not been worked out yet, meaning that many questions remain unanswered.

"Questions like what the players in each sector will actually choose to do, once they are certain they are allowed to do it. For example, in terms of self-provisioning, is it likely that some ISPs and VANS could also start building their own access infrastructure, by digging trenches and erecting masts?

"What will be the impact of VOIP on the corporate, SME and consumer sectors, and how will VANS and ISPs - as well as those wireless operators building 3G networks - position themselves in this market?"

Neilson says the BMI-T report, New Opportunities for VANS and ISPs in SA, aims to provide an analysis of the local VANS and ISP services markets in a changing future competitive landscape, as well as offering market forecasts in key categories and re-assessing the regulatory process of market liberalisation.

"It also provides a discussion of alternative future scenarios, development of a `most likely` scenario, a projection of market structure and forecasts, and analysis of key players and their business models and strategies," he concludes.